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*sigh*

The dollar's value drops when you print more precisely because it is tied to the economic assets of the nation. If the dollar were backed by gold and you printed tons of it, then each dollar would buy less gold, too.

The only advantage gold backing had was tying the money to a fixed asset. But even that can be abused. In the 1800s farmers heavily in debt wanted silver certificates to be given equal weight to dollars based on gold. The feds could just as easily pass a law that said next week one dollar buys only half as much gold as it did before. In fact, Roosevelt did stuff like this all over the place during the Great Depression. He loved to artificially manipulate gold markets and gold values. The effect was exactly the same as printing more dollars.

So you see, simply backing currency with a precious metal is meaningless.

As a further illustration, let's go ahead and assume we tie the U.S. dollar to gold and someone suddenly discovers a huge vein of gold that doubles the world supply of the metal.

Has the economic strength of your nation suddenly doubled because you have twice as much gold, now, or has your dollar's purchasing value declined because the commodity isn't quite so rare?

Fanatic gold backers are suffering the same problem the Spanish had. They thought their wealth was measured by how much gold they had in their treasuries. The Brits knew better. They understood that wealth was what you made and traded. Guess who went on to rule the world.